Sarine’s ytd (Jan to Sep) profitability was relatively subdued, with lower equipment sales due to excess midstream inventories in Q2 and Q3, as well as the illicit actions of competitors. Simultaneously, Sarine incurred considerable R&D costs related to the development of Clarity and Colour grading technology and Sarine Profile. This was further exacerbated by the strengthening of the Israeli shekel. However, downstream demand remains strong (according to the company), while new products and lower R&D expenses should support earnings going forward. Sarine trades on a P/E of 16.3x FY17e, a 35% discount to the peer group.

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